Question 1

Yippie Sdn Bhd is a Malaysian resident company with a paid up capital of RM3 million at the financial year ended 31 December 2019. It manufactures various types of computer accessories for the local and overseas market.

The company submits its Profit and Loss Account for the year ended 31 December 2019 as follows:

	Notes	RM000	RM000
Sales			501,600
Less:
Cost of sales	1		329,600
Gross profit			172,000
Add: Other income
Interest	2		58
			172,058
Less:
Salaries and wages	3	41,117
Entertainment	4	1,100
Depreciation		1,300
Repair and maintenance	5	560
Advertisement	6	33
Insurance		183
Professional fees	7	242
Foreign exchange	8	(15)
Donation	9	75
Miscellaneous expenses	10	52
			44,647
Net profit before taxation			127,411

Notes:

1. Cost of sales includes

1. During the year, the companys warehouse was broken into by thieves and an estimated RM30,000 worth of accessories were stolen. The insurance recovery of RM28,000 was received.
2. Computer accessories, with the selling price of RM20,000, were used to provide sponsorship to the customer, EXO Sdn Bhd, for annual dinner function.

2. Interest

The interest was received in respect of investment of RM1,000,000 in the government bond on 15 January 2019.

3. Salaries and wages

The following charges have been included in the salaries and wages account:

1. Salary amounted to RM80,000 was paid to three administrative clerks who are certified by the appropriate authorities as disabled.
2. An amount of RM12,000 spent for internship allowance given to five undergraduate students from INTI International University for their six months internship attachment with the company which is certified by Talent Corporation Malaysia Berhad.
3. Purchase of Rolex watches worth RM20,000 to be given to selected employees as gifts for excellent performance.

4. Entertainment

The entertainment expenditure includes the followings:

1. RM30,000 on the companys annual dinner for staff held in Sunway Lagoon Resorts
2. RM80,000 for the disbursement of the promotion teams entertainment expenses.

5. Repair and maintenance

Repair includes a sum of RM50,000 spent on modifying the companys administrative building to provide easier access for the disabled employees and to help them work more comfortably.

6. Advertisement

Advertisement expenses include the announcement of the wedding of the companys managing director (RM4,500) as well as congratulatory messages on the occasion of several of the companys customers and sellers being awarded honorary title (RM15,000) and staff recruitment (RM13,500).

7. Professional fees include:

1. legal fees of RM5,000 for the removal of a company director whose conduct was found to be unsatisfactory;
2. RM7,000 on legal action taken against a plastic supplier in Japan for unsatisfactory quality of supplies.
3. RM25,000 paid for the trademark registration of a new design of computer accessories in Dubai.

8. Foreign exchange

Foreign exchange gains and losses comprise the following:

	RM'000
Unrealized gain from the sale of goods	20
Realized loss from the purchase of machinery	5

9. Donation

The company sponsored two employees at Sunway University for a full time education Master degree course in information technology and communication. The company spent RM75,000 during the year that comprised expenditure on tuition fees and books.

10. Miscellaneous expense

Payment of RM52,000 to the management consultancy firm based in Thailand for an advice of corporate restructuring exercise in which the companys ordinary share capital has been increased by RM500,000 in June 2019. The accounts clerk has ignored the withholding tax implication on such payment.

11. Other information:

1. Yippies accountant has calculated the capital allowance for the year of assessment 2019, is RM298,000 meanwhile for brought down capital allowance from the year of assessment 2018 is RM100,000.
2. Due to rising robbery cases in the neighbourhood factories, the company has invested RM120,000, on the closed circuit television, imported from Japan, and also paid RM2,000 for the import duty on the equipment. In addition, the company spent RM6,000 for the structural modification of the factory for the purpose of installation of such equipment.

Required:

Compute the income tax payable by Yippie for the year of assessment 2019. (Notes: Your computation should start with the profit before taxation figure and follow the descriptions used in the notes to the profit and loss account, indicating nil in the appropriate column for any item that does not require adjustment.)